Nanjing Automobile's plans to revive car production at Long-bridge has overcome another hurdle after the Chinese government approved its turnaround plan.

The decision by Beijing's National Development and Reform Commission means Nanjing (NAC) will be able to restart production under the MG and Austin brands.

The decision follows NAC signing a 33-year lease with Longbridge landlord St Modwen to use part of the factory site.

A source close to Nanjing said: "This is the necessary passport for NAC going anywhere and doing anything. From now on, we can almost do anything independently that we want. It will help raise the money we need."

Money is not thought to be a problem for the company, with three American banks said to be interested in backing its plans. The source said NAC would produce its first car, the TF and then ZT early next year, simultaneously in both China and Longbridge.

He added the company would recruit about 1,300 employees in China and 250 in the UK to begin with to make the cars which will be sold using the MG brand.

The source said the first car would be launched on March 27 next year, to mark NAC'S 60th anniversary.

He added the MG series would be renamed as MG3Z, MG5Z and MG7Z, from the original MGZR, MGZS and MGZT - "so they resemble BMW with its 3, 5 and 7-series".

Nanjing Auto chairman Wang Haoliang said the production lines and the research and development centre of "Scheme 566", the name given to the purchase deal, would be located in Nanjing, capital of east China's Jiangsu Province.

"We will produce top-grade MG-75s in Pukou, Nanjing. The first car is hopefully to be rolled off the production line in the first half of 2007," he said.

Nanjing Auto will compete in selling cars developed by MG Rover with Shanghai Automotive (SAIC), which lost out in the auction for Rover last year but retains the rights to make Rover 75 and Rover 25s and their K-series engines.

SAIC's first model, a new generation Rover 75, is scheduled to be launched in September, ahead of Nanjing's MG.

But while NAC has now edged closer to its plan of restarting production in the UK and China, its business partner GB Sports looks to have failed in its efforts to buy MG Sport and Racing.

GB Sports, which was headed by former Powertrain boss Fraser Welford Winton, had agreed a price with administrators PricewaterhouseCoopers to buy the business.

But it seems GB has had trouble raising the money for the operation, which produced the MG X Power SV sports car.

An auction of the remaining cars is to be held at Longbridge on March 25, featuring more than 900 lots including complete and part-built cars.

Auctioneers Wyles Hardy have been appointed to oversee the sale which will include the record breaking MG ZT-T 765 Bonneville, the world's fastest estate car clocked at 225.6mph.

Matt Hardy, managing director at Wyles Hardy, said: "Everything from T-shirts and pens to SV cars will be up for sale. We have had lots of interest from MG enthusiasts and collectors from all over the world, including Japan and the US.

"This is a strange situation to be in. There is still a small number of engineers employed at the business who are very keen for the administrators to effect a sale. It has been a pleasure working with these people and we hope they have a secure future. But if that does not transpire we have got a sale to do." ..SUPL: